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$1.1 Billion in Fraudulent Tax Refunds Stopped in 2016: Security Summit

June 30th, 2016 · No Comments · Identity Theft, Taxes

by Kristy Welsh

(Last Updated On: November 24, 2017)

$1.1 billion in fraudulent tax returns stopped in 2016Last year, the IRS told us about new measures to help prevent fraudulent tax refunds. Well, the results are in and, evidently, it did a good job of things this past tax season. Here’s the Security Summit’s rundown of 2016 accomplishments, as well as 2017 initiatives.

About the Security Summit

The IRS cannot prevent tax fraud on its own. It needs the cooperation of multiple agencies and businesses. So in 2015, the Security Summit was created, a collaborative effort among the IRS, state governments, tax filing software companies, the Federation of Tax Administrators, the Council for Electronic Revenue Communication Advancement, and the American Coalition for Taxpayer Rights.

2016 Accomplishments

Thanks to the Security Summit, the IRS says this year:

1) Consumers using tax filing software were required to use a minimum 8-digit password and provide answers to security questions

2) Tax filing software companies (e.g., H&R Block, TurboTax) shared tax return data elements with the IRS and states. This information helped identify when:

  • A device was being used to file multiple tax returns
  • An Internet Protocol address was used to file multiple tax returns
  • A tax return was generated by a machine instead of a person

3) Regularly reviewed tax returns for suspicious activity

4) Launched its public awareness campaign: “Taxes. Security. Together.”

Thanks to these efforts, the IRS was able to stop $1.1 billion in fraudulent refunds claimed on more than 171,000 tax returns. That is a significant increase over 2015, when they stopped $754 million in fraudulent returns claimed on 141,000 returns.

2017 Initiatives

Next year, the Security Summit will focus on:

1) Improving the security of W-2s with a 16-digit verification code that taxpayers will be prompted to enter when using tax filing software

2) Adding even more data elements to the list that tax filing software companies provide to the IRS and states

3) Improving the early warning system for tax fraud schemes through the creation of the Identity Theft Tax Refund Fraud Information Center

4) Building on the “Taxes. Security. Together.” campaign

5) Giving financial institutions the tools to identity suspicious tax refunds so they can be returned to states for verification

Learn more about protecting yourself when filing your return.

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